For Argentina, finishing nuclear plant a do-it-yourself task

DrewBenson

(This article was originally published Monday)

LIMA, Argentina (MarketWatch) -- The towering orange crane near the unfinished Atucha II nuclear power reactor was among the tallest in the world back in the 1980s, nuclear engineer Roberto Quaranta says as he leads a group through the compound.

A curious fact to point out, perhaps, but then the electric power plant was supposed to have been finished in 1987.

Today, nearly three decades after work began on the nation's third nuclear power plant, President Nestor Kirchner's administration has vowed to have Atucha II up and running by the second half of 2010. The plant is about 80% finished and the government has budgeted $700 million to complete it, well below the $2 billion cost of a new one.

Although aggressive nuclear programs raise red flags in some corners of the globe, Argentina is a signatory of the nuclear non-proliferation treaty and as such has pledged to use nuclear technology for peaceful means and not for nuclear weapons.

Argentina's return to atomic power comes amid a global rebirth of the industry made possible by a jump in world energy prices and, to some extent, concerns about the greenhouse gases emitted by fossil fuels.

At a rally at Atucha II this month, Kirchner blamed his predecessors for derailing the plant. Rhetoric aside, the move to mothball the nation's nuclear program largely reflected a global trend brought on by accidents at Three Mile Island in the U.S. in 1979 and Chernobyl in the Ukraine in 1986.

Besides Argentina, other nations are considering plans to complete some of the more than 40 nuclear plants worldwide on which work had stalled by the end of the last decade.

In the region, neighboring Brazil is dusting off plans for a postponed nuclear plant from the 1980s, Angra III, which planners hope to complete by 2013. Mexico is planning a $605 million upgrade at its Laguna Verde site aimed at boosting generation by 20%. Meanwhile, energy-strapped Chile is considering a move into nuclear power amid increasingly acute natural gas shortages. Of the 439 nuclear power reactors operating worldwide, just six are in Latin America: two in Argentina, two in Brazil, and two in Mexico.

For engineers at Argentina's state-run Nucleoelectrica Argentina SA, or NA-SA, the prolonged delay means the completion of Atucha II has now become a do-it-yourself project.

That's because Germany's Siemens AG
SI, +0.00%
which originally led the project, got out of the nuclear energy business, transferring active accounts to Paris-based Framatome ANP, now known as Areva NP. The Atucha II plant was not among those transferred, however.

To allow Argentina to finish the project, Siemens instead agreed last year to transfer Atucha II plans and technology to NA-SA. Siemens also plans to supply non-nuclear electricity parts and services needed to complete the plant.

As such, "we have become the technologists," said Atucha II project director Jose Luis Antunez, his voice echoing on a platform inside the nuclear plant's long-completed 56-meter diameter sphere.

But is it safe to finish off a pre-Chernobyl nuclear plant where construction has been on hold since 1996? Atunez said yes.

The finished Atucha II buildings, which lies right next to the operating Atucha I reactor, have been maintained over the years, he said. For example, engineers filled the installed water vapor generator with hydrogen and sealed it off to preserve it.

Juan Schroder, an Argentine environmentalist who has been monitoring the nation's nuclear program for years, isn't convinced.

"Safety in nuclear plants around the world is monitored by computer - and the (planned) computer system for Atucha II is 15 years old," Schroder said. He said he worries that any plan that matches a decades-old reactor with a modern computer system is inherently flawed.

Under the agreement with Siemens, NA-SA cannot use the Siemens plans to build more nuclear power plants.

Not that they'd need to.

Nuclear power technology has advanced since the Atucha II plants were drawn up in the late 1970s. Indeed, in their plans for another one, maybe two, additional 740-megawatt nuclear plants, Argentine government officials are discussing more up-to-date designs with state-owned Atomic Energy of Canada Limited, or AECL.

Argentina currently has two operating nuclear power plants, Atucha I, built with Siemens, and Embalse, built with AECL in the province of Cordoba. The 360 MW Atucha I came on line in 1974, while the 650 MW Embalse began operating a decade later; together they account for about 8% of the nation's electricity.

Argentina re-launched its nuclear power program a year ago this month as the nation's energy woes began to gain momentum. Shortages of natural gas used to power conventional generation plants began to appear in early 2004, while the national power grid began to run out of generation capacity late last year.

"If we had built the four (nuclear power plants) we originally planned, we wouldn't have the problems we do today with natural gas," Antunez said.

As interest in nuclear power waned, the privatization of Argentina's energy market in the 1990s led to a boom in domestic natural gas exploration and production. But a utility rates freeze for residential clients launched in early 2002 has discouraged the continued expansion needed for gas and power supplies to keep up with demand, according to economists.

Working off decades-old blueprints poses continuity problems for NA-SA, and Quaranta said the biggest challenge has been rounding up engineers familiar with nuclear plants, and getting back in touch with an array of suppliers. Last year, government planners started calling Atucha II veterans interested in coming back.

Although the nation's atomic power program was largely put on ice, nuclear research has remained active. State-owned company INVAP has steadily engaged in nuclear development projects, including a 20 MW nuclear research reactor inaugurated outside Sydney, Australia, earlier this year.

INVAP is also developing an exportable 27 MW-to-300 MW nuclear reactor for power generation that it aims to sell to developing nations.

Among other nuclear advantages, Argentina also has inactive uranium mines and the capacity to enrich uranium, process fuel rods, and produce heavy water used in reactors.

Mines were shuttered in the 1990s, when the price of uranium was as low as $20 per kilogram. But since the price has jumped to $110 per kilogram, a handful of U.S., Canadian, and Australian miners have recently sought uranium exploration rights in several Argentine provinces.

The Atucha I and Embalse plants use about 120 tons of uranium a year, while Atucha II will need another 100 tons a year. For now, Argentina buys uranium on the world market, with shipments coming from Kazakhstan, the U.S. and Canada, among other nations.

Walking away from Atucha II's dome, past its large red-brick generator building, Quaranta said the people and suppliers have been lined up and planners are now ready to finally get back to heavy lifting - installing the nuclear reactor and a maze of heavy water and cooling pipes.

(Anthony Harrup in Mexico, Bernd Radowitz and Alastair Stewart in Brazil, and Carolina Pica in Chile contributed to this article).

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